Insider-Trading Informant to Forfeit $40,000, Avoids Prison

Karl Motey, a technology consultant who has been praised by the government for his help in insider-trading investigations, avoided prison time.

NEW YORK -- Karl Motey, a technology
consultant who has been praised by the government for his help
in insider-trading investigations, avoided prison time at his
sentencing on Monday.

U.S. District Judge Jed Rakoff in Manhattan ordered Motey to
forfeit $40,000 and to serve a year of supervised release, for
conspiracy and securities fraud. Rakoff called Motey "a
particularly impressive cooperator."

Motey, 48, recorded more than 400 conversations with more
than 50 subjects of the government's wide-ranging insider
trading probe, according to sentencing papers filed by his
attorneys. He continues to help authorities with ongoing
investigations, the Manhattan U.S. Attorney's office said in a
separate sentencing memorandum.

In 2005, the Wall Street Journal named Motey a top
securities analyst in the semiconductor industry, and a year
later he started the Coda Group research consulting company in
Los Altos, California.

Starting in 2007, he has admitted, he began relaying
confidential information about Marvell Technology Group Ltd
and other companies. In the case of Marvell, Motey got
the inside information from an employee at the company,
according to prosecutors.

"The past three, four years have been the most shameful,
difficult part of my life," Motey told the judge before he was
sentenced. "I severely apologize for my mistakes."

Motey began cooperating with authorities soon after a
Federal Bureau of Investigation agent stopped him on the street
in April 2009. He pleaded guilty in 2010 to conspiracy and
securities fraud.

His cooperation helped lead to more than 20 convictions of
other defendants, according to prosecutors.

These include former hedge fund manager Doug Whitman, who
was sentenced last month to two years in prison, and James
Fleishman, a former sales representative with Primary Global
Research, who was sentenced in 2011 to 2-1/2 years in prison.

Primary Global Research is one of several "expert network"
firms, conduits between traders and former industry executives
and other experts, that prosecutors have increasingly
scrutinized.

Motey's assistance in the prosecutions "has been
extraordinary," Manhattan U.S. Attorney Preet Bharara wrote in
the government's sentencing papers.

Motey is one of several informants who have proven critical
in the government's insider trading probe.

Roomy Khan, a former Intel Corp executive who helped
authorities in their probe of now-imprisoned hedge fund manager
Raj Rajaratnam, was sentenced last week to a year in prison for
securities fraud, obstruction of justice and conspiracy.

Another cooperator, former hedge fund consultant Wesley
Wang, was sentenced last month to two years probation after
pleading guilty in July to two counts of conspiracy to commit
securities fraud.

The case is U.S. v. Karl Motey, U.S. District Court,
Southern District of New York, No. 10-1249.